IT Adoption Trends in Manufacturing

IT adoption in manufacturing is increasing in terms of automating industrial and transactional process capabilities. According to MintJutras research, the adoption of cloud services in manufacturing is expected to grow by 45% in the coming years. Already 22% of all manufacturing and distribution software across the world are deployed in SaaS cloud model. Cloud based systems are mostly preferred by manufacturing firms due to their characteristics such as control over upgrades, flexibility and optimization characteristics.

Manufacturing is a highly dynamic industry which is vulnerable to volatile business cycles and changing markets. Manufacturing encompasses a variety of functions such as product engineering, services, product lifecycle management, scope for new or improved products in potential markets and so on which offer significant opportunities for manufacturing firms. However in spite of the opportunities and potential, manufacturing firms have to cope with competition, changing regulations, cost and margin pressures which are big challenges.

IT Adoption trends in Manufacturing

IT adoption in manufacturing is largely driven by industrial automation systems and operational management systems. Industrial automation systems make use of technologies namely PLC, HMI, SCADA and so on which have a direct impact on the quality of physical goods produced whereas operational management systems are more focused on automating manual processes through the use of robotics, wireless and mobile applications, reporting dashboards and fully automated workflows. In the case of India, the manufacturing firms are mostly business entities that deliver end products directly or indirectly to customers. These firms work towards gaining competitive advantage through innovation and new product launches.

A close look at the rise of IT adoption in manufacturing sector shows that manufacturing companies prefer emerging IT systems and technology to overcome certain key bottlenecks such as,

  • Challenges in manual operations
  • Issues in managing scale and size in product manufacturing
  • Complying with statutory requirements, changing regulations and efficient client handling
  • Challenges in resource optimization, operational excellence and quality

The above inescapable challenges play a significant role in affecting product accuracy, executing processes in scale, capitalizing on intelligence and in the development of relationships with suppliers, distributors and all stakeholders. Almost all manufacturing sector companies commonly look for short time-to-market schedules to sustain themselves in competitive markets.

IT strategies using emerging technologies such as cloud computing offers the potential for manufacturers to leverage innate intelligence and knowledge into improved business value. IDC in April 2015 explained that there is an accelerating trend across manufacturing firms worldwide to adopt cloud service models as its mainstream operations. Interestingly cloud based SaaS model is preferred by manufacturers to deploy applications such as financial accounting and ERP, CRM, Sales and marketing automation and email. IDC survey on IT adoption in manufacturing indicates 61.6% of manufacturers have some kind of cloud service models in their operations while others are considering new technology adoption to replace existing IT services.

As manufacturing is turning towards IT to overcome their challenges, given below are some trends that can quite likely transform manufacturing in the coming years,

  • Cloud enabled supply chains: Today’s manufacturing landscape is more inter-connected and interdependent thus requiring more collaboration and links with supply chain partners in multiple locations. This scenario can be found in manufacturing firms that cater to customers beyond their geographical boundaries. Such companies are more likely to adopt cloud services to run web based applications to provide real time visibility, become more responsive to customer needs and support to customers.
  • Analytics and mobility: Business intelligence and knowledge are derived from analytics software which churns internal and external data to provide actionable business insights and knowledge. Manufacturing companies that rely on built-to-order or configure-to-order strategies as their core business model would need high-end IT capabilities to capture knowledge, provide mobility support for analytics, business intelligence reporting and analysis. Cloud based systems provide the much needed flexibility in configure-to-order and built-to-order models as they can scale or descale based on production volume. Further cloud systems support multiple mobile devices which can share information on the go.
  • Workflows, collaboration platforms and dashboards: Manufacturing companies deliver real-time status and forecasts and implement applications such as the vendor managed inventory (VMI). Cloud service models enable such firms to fully launch supplier portals and collaboration platforms that provide dashboard information to the management and automate workflows. Dashboard software is also used to report status of each transaction in each branch which is mostly sought by the management, even when they are mobile. Collaboration platforms support product lifecycle management and to launch of new products quickly thus getting an edge over competitors. This strategy is more widely adopted nowadays to overcome problems in time-to-market objectives.
  • Automated customer service and support: Customer support and helpdesk is a critical function to maintain good reputation in markets. Automating online customer service inquiries by integrating them with content management services to handle order processing, pricing, and logistics can be made more efficient and effective by adopting cloud SaaS service models. Manufacturing firms benefit by cost and time advantages through automated customer support.
  • Increased reliance on two-tier ERP systems: ERP implementation strategies provide advantages in material planning, supplier management and at the same time reduce costs and overheads. Large manufacturing firms stand to gain more independence by adopting two-tier ERP strategy thus minimizing their dependency with one ERP vendor. Two-tier ERP systems take care of scaled down operational needs through programming and customization. Cloud based services are the best option to implement a two-tier ERP strategy because the IT infrastructure and operating environment is readily available in their service models, resulting in capital savings on IT infrastructure for manufacturer.

The above trends indicate that IT adoption plays a significant role in manufacturing. IT adoption trends in manufacturing focus on the capacity to drive business strategy and competitive high growth to achieve profits. Therefore companies that strive to achieve superior operational efficiencies should adopt an integrated IT system that converge industrial automation and transactional business management. Such IT systems to work efficiently need high performance compute, network and storage capacities which are available in cloud service models easily from data centers for adoption.